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ISLAMIC ETHICS RKUD 3020 BUSSINES MISCONDUCT- RIBA NURUL AANIS FATIHAH QUTRATUN NADA 1125050 NOOR SAKINAH 1127424 NUR BASIRAH 1122752

Islamic Ethics

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business misconduct - Riba

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Page 1: Islamic Ethics

ISLAMIC ETHICSRKUD 3020

BUSSINES MISCONDUCT- RIBA

NURUL AANIS FATIHAHQUTRATUN NADA 1125050

NOOR SAKINAH 1127424NUR BASIRAH 1122752

Page 2: Islamic Ethics

Definition of Business and Business Misconduct

Allah describes people who attain successs as those who are “inviting to all that is good (khayr), enjoining what is right (ma;ruf) and forbidding what is wrong (munkar). This will help Muslim community who are in business avoid the possibilities of corruption or problem in future.

Page 3: Islamic Ethics

In an Islamic context the most term most closely related to ethics while doing business based on the Qur’an is khuluq.

The Qur’an also uses a whole array of terms to describe the concept that is khayr (goodness), birr (righteousness) , qist (equity), adl (equilibrium and justice), haqq (truth and right), maaruf (known and approved) and taqwa (piety).

Absolute honesty in business and commerce is really an Islamic concept.

Page 4: Islamic Ethics

Prophet Muhammad (PBUH) who, on the one hand, urged his followers to adopt trade as their profession

On the other hand, exhorted them to observe truthfulness and honesty in their business transactions.

Accordig to Imam al-Ghazali◦ to adopt trade as a profession or to set up his

own business should first acquire a thorough understanding of the rules of business transactions codified in the Islamic Shari'ah.

Page 5: Islamic Ethics

Importance of fairness in business as stated in the al-Quran:

"And, O my people, give full measure and weight justly, and defraud not men of their things, and act not corruptly in the land making mischief. What remains with Allah is better for you, if you are believers" (Hud 11: 85-86).

Business should be based on the fundamental principle of "Ta'auanu ala birri wa't-taqwa" (mutual co-operation for the cause of goodness or piety).

Page 6: Islamic Ethics

Prohibited business in Islamic way. That is ◦ Monopoly business◦ Speculative business basd on selfish interest. ◦ Interest transactions.◦ Transactions similar (in nature) to gambling◦ Munabadha and Mulamasa.

Forbidden interest or in Islamic word Ribaa. In Surah al-Baqarah:275

“ But Allah has permitted trading and forbidden interest ( Ribaa)”

Page 7: Islamic Ethics

Meaning: According to Hazrat Shah Waliullah Dehlvi, riba is a loan with the

condition that the borrower will return to the lender more than the quantity borrowed.

In the Quran has mentioned several times about riba, for example:

“If the creditor received a goat as mortgage from the debtor, the creditor may use its milk to the extent he has spent in providing fodder to the goat. However, if the milk is more than the price of the fodder, the excess is riba,”

Page 8: Islamic Ethics

Type of riba:

1) RIBA AL-NASI’A - The term Nasi’a means ‘postpone’ or ‘wait’. - Riba al-Nasi’a is equal to the interest charge on loans. In

other word, this type of riba is an advance of a positive rate of return on a loan as a reward for waiting the borrower to pay the debt.

2) RIBA AL-FADL - Unlawful in the exchange of two counter-values where the

excess is measurable through weight or measure. - Eg: excess taken in exchange of specific commodities(Al

amwal Ur Ribawiyyah) which are homogeneousNarrated from Umar, The Prophet said: “ The selling of wheat for wheat is riba except if its handed from hand to hand and equal in amount. Similarly with barley and dates” (bukhari1985, h.2026)

Page 9: Islamic Ethics

According to Imam Abu Hanifa on Riba-al-Fadl• commodities must have two commo

characteristics Weight Volume

According to Imam Shafi on Riba-al-Fadl• commodities must have two common

characteristics be a medium of exchange be edible

Page 10: Islamic Ethics

Types of banking 1) Conventional banking

2) Islamic banking

Riba in banking

BANK CLIENT

Money

Money+Money(Interest)

BANKCLIENTGoods&

services

Money

Page 11: Islamic Ethics

Differences between :

conventional

Is based on interest.

Deals in money or papers.

Does not involve itself in trade and business

Page 12: Islamic Ethics

Economics-serious impact both to the society and the country development. -misuse the national wealth lead to inflation, increasing the goods costs and imbalance economics development. -country does not have enough fund, so the other alternative is borrow some money from the rich, money borrowed needs to return back with additional amount.

IMPLICATIONS OF RIBA

Page 13: Islamic Ethics

Riba can create havoc and chaos in peoples it selves as the money taken by the givers will make ones’ rich easily without effort. -Riba can lead to the disruption of responsibility among the people. -lead the laziness of load of efforts in earning income. -slow down the development of business and lead immoral act. - make them drop their responsibility toward justice and being a selfish. -arrogant and hard heartedness. These kinds of attitude are riak and takbur which are not a healthy lifestyle.

Psychological and social effects

Page 14: Islamic Ethics

The gap between rich and poor people, increasing poverty, and lack of basic need. - occur to insecure between people in a country, when peoples are forced in need money they tend to do everything bad. Or in other words, the poor will not have chances or their chances to move in a better life are in slow progressing and create stresses on them. -riba makes the poor in disadvantages and suffered, so they will lost or need to let go some good opportunity.

Harassing the poor

Page 15: Islamic Ethics

-not have a healthy competence as they got money or their salary covered by riba more than the profit they obtain. -used to get more money on riba, then they do not have to work hard and have a great competence with each other, while at the same time they oppressing the peoples around them which rely on them to live their lives. -create a bad image on a huge community and also the nationality. But the most importance is in religious aspect. -riba act can reduce the interest of peoples in having a deal with this kind of matter and distort the development of a country.

Create non-competence community

Page 16: Islamic Ethics

In religious matter, God can give punishment on peoples who practice riba in no time during life time and also in hereafter. -riba is haram and it is a sin. -need to repent on Him. -Allah is the law giver, and He has the right to curse anybody involving in riba.

The punishments of God

Page 17: Islamic Ethics

This happens when peoples giving away the property or money for some purposes. People tend to give and take riba when dealing with business for example.

Waste of Resources

Page 18: Islamic Ethics

Solutions of Riba

Page 19: Islamic Ethics

1. Save our world from more wars and famines.

2. Creating a just system.3. Use the interest based

system on condition.

Page 20: Islamic Ethics

1. Clarify why Islam prohibits Riba?2. Quranic explainations. “O you who have believed, do not consume

interest, doubled and multiplied, but fear God that you may be successful. And fear the Fire, which has been prepared for the disbelievers.” (Quran 3:130-131)

Conclusions

Page 21: Islamic Ethics

“Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, trade is [just] like interest.’ But God has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with God. But whoever returns [to dealing in interest or usury]?those are the companions of the Fire; they will abide eternally therein. God destroys interest and gives increase for charities. And God does not like every sinning disbeliever.” (Quran 2:275-276)

Page 22: Islamic Ethics

“O you who have believed, fear God and give up what remains [due to you] of interest, if you should be believers. And if you do not, then be informed of a war [against you] from God and His Messenger. But if you repent, you may have your principal?[thus] you do no wrong [to others], nor are you wronged.” (Quran 2:278-279)

Page 23: Islamic Ethics

“Avoid the seven destructive sins: associating partners with God, sorcery, killing a soul which God has forbidden- except through due course of the law, devouring interest, devouring the wealth of orphans, fleeing when the armies meet, and slandering chaste, believing, innocent women.” (al-Bukhari and Muslim)

Hadith

Page 24: Islamic Ethics

“One coin of interest that is knowingly consumed by a person is worse in God’s sight than thirty-six acts of illegal sexual intercourse.” (al-Tabarani and al-Hakim)